Conservatism example sentences

Personal opinion, judgments and estimates are made while preparing the financial statements to avoid any possibility of over statement of assets and liabilities, income and expenditure, keeping in mind the convention of conservatism.The concept of conservatism requires that profits should not to be recorded until realised but all losses, even those which may have a remote possibility, are to be provided for in the books of account.This approach of providing for the losses but not recognising the gains until realised is called conservatism approach.Recall that the principle of conservatism (prudence) requires that instead of ignoring such items of expenses, adequate provision must be made and charged against profits of the current period.European governments were driven by a spirit of conservatism.The concept of conservatism (also called 'prudence') provides guidance for recording transactions in the book of accounts and is based on the policy of playing safe.Creation of provision is necessary to ascertain true and fair profit or loss in compliance with 'Prudence' or 'Conservatism' concept.It is necessary to take into account such an expected loss while calculating true and fair profit/loss according to the principle of Prudence or Conservatism.from the book of accounts are some of the examples of the application of the principle of conservatism.